Innovation or R&D Xavier Sala-i-Martin Columbia University June 2011
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Transcript of Innovation or R&D Xavier Sala-i-Martin Columbia University June 2011
Innovation or R&DXavier Sala-i-Martin
Columbia University
June 2011
Innovation
NEW WAY TO SATISFY A (perhaps new) DEMAND (sometimes, a demand that customers don’t even know they have)!
Is this achieved through R&D?
Should ONLY developed countries worry about innovation?
Which brings me to…
PIZZA!!!
History of Pizza: From Phoenicians to Tomatoes
Belladona oUvas del Diablo
Arameic word for bred:PITTA
Early Pizza: From Marinara to Napolitana 1st Pizzeria in the World:
Antica Pizzeria Port d’Alba in Naples
New York PizzaLombardi’s employee (Tonono Pero)and Coal Oven
The Pizza Slice: Harlem, NY
Chicago PizzaRic Riccardo and Ike Sewell
Pizza Delivery: Domino’s
Tom Monaghan
Pizza Hut: McDonald’s in Pizza
DiGiorno Frozen Pizza: Di Giorno Rising Crust Technology
Gourmet or California-style pizza
Lessons from History of Pizza for Innovation
IT IS NEEDED IN EVERY SECTOR
SMALL STEPS
MOST IDEAS ARE NOT R&D: Chance/Employees (Tonono Pero at Lombardi’s) But when R&D is needed, it is DRIVEN BY NEEDS, NOT BY TAX
INCENTIVES!!
Innovation is done by individuals (workers) or SMALL BUSINESSES
Some times “copying what works elsewhere” is a way to succeed (Pizza Hut)
But some times, in order to succeed you need to innovate by adapting to your own specific circumstances to the tastes of your customers –Chicago to the environment –there is lot of cheap coal in NYC to the income of your customers –slices in Haarlem to the desires of customers –fast delivery in college
Where do Business Ideas Come From?
Amar Bhidé ( “Origin and Evolution of New Businesses”)
500 growth businesses in USA
Results71% of enterprises “saw” an idea while working for
someone else: WORKERS!21% found an idea “by chance”Only 8% through formal R&D...
But usually “PULLED” by a firm (not pushed by the government)
Innovation “Policy”
WHAT IS NOT:It is NOT R&D subsidies (you would not target
the right people or the right sector)It is NOT industrial policies or PLANS directed by
clever bureaucratsIt is NOT the promotion of “CLUSTERS” and
“Technology Parks”everyone wants to be Silicon Valley 2!!!. Latest one
is Skolkovo in Russia, which is meant to fail.
What IS:Creation of an environment conducive to
(A) creation of ideas and (B) implementation into real products, services and
processes
Innovation “Policy” (2): A Business-Friendly Environment
IDEAS HAVE TO BE IMPLEMENTEDInfrastructures:
Physical and virtual (technological adoption!)Not enough to have infrastructures, they have to be run
efficiently!Institutional Quality
Trust in law and order Tax system that works and is efficientPolicy Certainty (opposite of Policy Reversals):CrimePrivate Corporations Scandals (Enron, Maddof, Banking, …)
Regulation “barriers” :Bureaucracy (World Bank Rankings of Doing Business)Competition in Goods Market:
DANGER OF PROTECTIONISM (Post-Recession Neo-Nationalism: E-on, France Suez, Danone, ...).
Innovation “Policy” (2, Cont.): A Business-Friendly Environment
Competition in Labor MarketsLegal.
Spain (worst-hit country in Europe as far as unemployment is concerned)
Mental (regional mobility)Meritocracy (Football again)Female Discrimination (Did Affirmative Action work?)
Financial MarketsNeed to finance entrepreneurs and innovators (not so
much real estate): capital riskCareful with demonization of banking system after the
current financial crisis: no ideas can be implemented without banks
Firms need to set up mechanisms to LISTEN and SCREEN their WORKERS’ IDEAS
Innovation “Policy” Part 1: Creation of Ideas=Education
The world is changing and the education system is not!
World is moving so fast that, FOR THE FIRST TIME IN HISTORY:Kids know more than parents and teachersKids already live in the new world:
Newspapers? Books?Wearing watches?
Reading (Remember “Don Quijote”), TV, Playstation, and ARES
ARES: (Assembling Reconfigurable Endoluminal Surgical System)
Education: Change HOW we teach
(1) Are we sure we still want to divide classes by age?
(2) Are we sure we use the best available tools to teach?
(3) Are we sure we can speak our student’s language?
(4) Are we sure we teach the “right” things?
(1) Are we teaching the right math? Statistics or Calculus?
(2) Are we teaching “critical thinking”?
(3) Are we teaching “creativity”
(4) Are we teaching to solve real problems?
(5) Are we teaching to learn from mistakes?
(6) Are we teaching to “not give up”?
(7) Are we teaching to ask for help?
(8) Are we teaching to be entrepreneur?
(9) Are we teaching to lead or to obey?
Education outside school
Parents:Weekly allowance?Reading or story telling?Public SpeakingSave/invest=teach riskSell toys
THE END